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California Car Dealer License

All types. All states. The very best solutions for your surety bond needs.
Young car salesman working with client in dealership.

In order to obtain a license for selling vehicles in the state of California, it is first necessary to get a California car dealer license surety bond.

Key Highlights

  • This bond does not provide any protection to the person starting the car dealership; instead, it provides a level of protection to customers.
  • The bond is required by the California Department of Motor Vehicles.
  • A business with good credit may only pay between 1 and 3% of the bond amount for a premium.

How do I purchase a California car dealer license bond?

NFP, the nation's largest and most reliable surety company, is authorized to issue California car dealer license bonds in each of the 50 states. We can provide the best rates for your bond, as well as the fastest issuance, to get your business off and running.

Our short online application makes it easy. Click below to start the application process today.

California Car Dealer License Bond FAQs

Yes, it is required by the California Department of Motor Vehicles, and this requirement is not subject to negotiation. These bonds must be posted by dealerships before beginning operations within state borders. The purpose is to protect unwary buyers against any fraud.

When this bond has been posted by a car dealer, the dealer, who is in effect the principal party in the surety bond contract, guarantees to the obligee, which is the state of California DMV, that they will operate in full compliance with all statutes listed in Section 11711, also known as the Vehicle Code.

In the event that the principal fails to live up to all the regulations listed in the Vehicle Code, a claim may be made against the bond, and it would oblige the third party, the surety company that sold the bond to the principal, to pay all damages associated with the failure to comply.

Assuming the claim was found to be valid, the surety company would pay the amount of the claim made, and then pursue the principal to recover the full amount of the claim that it had paid out. The dealer is ultimately held liable for any claim made by a disgruntled customer or the California DMV, which is enough to ensure that the dealer will generally comply with all statutes listed in the Vehicle Code.

Once you've purchased your bond, you can then follow the steps necessary to open a dealership in the state. The first step is to obtain the following forms, fill them out, and submit them:

  • OL902 - Property use verification for vehicle dealer's license
  • OL21A - Original application for occupational license
  • OL12 - Application for original occupational license
  • OL53 - Authorization to release financial information
  • OL248A - New dealer application checklist
  • OL25 - Surety bond of dealer
  • OL124 - Certificate of proposed franchise

After you've submitted all these forms for approval, it will be necessary to pay several fees, which are associated with the application process. The first of these fees is a $175 non-refundable application fee, then you'll have to pay a $1 Family Support fee, a $100 auto broker fee, a $300 new motor vehicle board fee, $70 per dealer plate, and $70 per branch location of your business.

Once you've received your bond and your auto dealer license, they will be set to expire at the same time, and that means that every year the surety bond must be purchased again, so that it remains in sync with your dealer's license. You should be aware that the surety company will always reserve the right to terminate the bond, and can do so at its option, provided that it gives the principal notice of at least 30 days prior to suspension.

The cost of a California car dealer license bond depends on the type of dealership and the applicant’s credit profile. The California Department of Motor Vehicles requires:

  • $50,000 bond for new and used retail auto dealers, as well as wholesale dealers selling 25 or more vehicles per year.
  • $10,000 bond for wholesale-only dealers, motorcycle dealers, and all-terrain vehicle dealers selling fewer than 25 vehicles annually

The annual premium is typically 1 to 5% of the bond amount.

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All Types. All States. The very best solutions for your surety bond needs.